Stock market investors were the biggest winners this year as equities outperformed all other investment classes, including real estate, treasuries, fixed deposits and offshore nests.
The Nairobi Securities Exchange (NSE) All Share Index, which measures the performance of all the listed stocks, gained 27.2 per cent this year while the NSE 20-Share Index, which tracks blue chip firms, is up 16.5 per cent.
In comparison, government securities and offshore investments have offered lower returns, as has real estate which was hard hit by the prolonged political uncertainty preceding and after the annulled August 8 General Election.
Investor wealth at the bourse as measured by market capitalisation went up by Sh567.2 billion from January 1 to close at Sh2.498 trillion on Wednesday, bringing to an end a two-year bear run that had eroded market value by Sh745 billion between March 2015 and March this year.
“The stock market performance during the year was driven by recovery in the banking sector in anticipation of an amendment of the interest capping law (after elections) and positive investor sentiment on Safaricom #ticker:SCOM,” said Neha Datta, investment consultant and risk manager at Zamara, formerly Alexander Forbes East Africa.
The revival of the market is a big boost for pension funds and insurance firms, which are among the biggest investors in equities.
Safaricom’s share price jump to Sh26.25 means shareholders have booked a capital gain of 29 per cent since January, when the telecoms operator was trading at Sh19.15 a share. Their paper wealth has grown by Sh284.5 billion.
Among the 11 listed banks, nine have recorded double-digit percentage gains in share price in 2017, led by DTB #ticker:DTK at 59 per cent. KCB #ticker:KCB and Equity #ticker:EQTY are up 42 per cent and 33 per cent respectively.
In the fixed income segment, the one-year Treasury bill has averaged a yield of 10.94 per cent this year, while the six-month paper has offered an average of 10.42 per cent.
Treasury bonds issued this year have offered returns ranging between 11.3 per cent and a maximum of 13.17 per cent.
The shilling has been largely stable, depreciating by just 0.6 per cent to the dollar this year. Offshore investment returns have ranged between 15 and 20 per cent this year, according to data from Actuarial Services East Africa (Actserv), although exhibiting higher volatility compared to the other classes due to global economic and political upheavals such as Brexit and the US-North Korea standoff.
Investors in real estate have been the hardest hit this year, paying the heaviest price for the political noise that has hit the Kenyan economy especially in the second half of the year.
They have seen a downturn in returns on both rental and sale prices, according to analysis done by realtors Hass Consult and the Kenya Bankers Association (KBA).
Hass says that in the one year to September property prices in Nairobi and its environs dropped by an average of 5.1 per cent, while rental prices fell by 0.3 per cent.
The KBA said in its third-quarter Housing Index that the falling rate of growth of house prices mirrors that of credit to the private sector, which at two per cent at the end of October is growing at near decade-lows.
“The lack of clarity on the electoral process freezes activity across all property segments as investors put on hold decisions pending conclusion of the process,” said Hass in its quarter three House Price Index report.
Land prices, however, eked out some growth this year at about five per cent, being a safer haven in the property segment compared to physical buildings which carry the risk of damage or reduced occupation in incidents of political chaos.
In 2018, analysts expect the trend to hold where equities continue their recovery as the economy moves on from the shackles of the election period.
“The markets are meant to look ahead and discount the future. I think the equity market will continue to outperform other assets in 2018,” said independent analyst Aly-Khan Satchu.
Investors will also be watching out for emerging investment options such as cryptocurrencies, which have this year grabbed the headlines due to the astronomical rise in the price of bitcoin in the fourth quarter of the year.